Trump's 50% Tariff on Indian Exports Threatens USD 87 Billion Trade, Experts Warn of Short-term Pain but Long-term Resilience Nevertheless, there is still a possibility that the tariff tensions could be resolved. India has extended an invitation for talks and welcomed an understanding between the US and Russia for a leaders' meeting in Alaska on 15 August

US President Donald Trump's decision to double tariffs on Indian goods has sparked a fresh wave of trade tensions between Washington and New Delhi, with experts warning of immediate disruption but also opportunities for long-term diversification.

The escalation began on 30th July 2025, when Trump announced a 25 per cent tariff, accompanied by a provocative tweet: "I don't care what happens between India and Russia. They can take their dead economies down together, for all I care." The remark drew sharp reactions in India and abroad.

That initial tariff took effect on 7th August and was already viewed as a significant blow to Indian exporters. But on 6th August, Trump added another 25 per cent levy, raising the total tariff to 50 per cent, the highest rate the US has imposed on any trading partner. The additional 25 per cent is scheduled to take effect on 27 August, leaving a narrow three-week window for talks.

The Trigger

The move follows difficult trade negotiations and longstanding US criticism of India's high tariffs and non-monetary trade barriers. Washington has also been angered by India's continued purchase of discounted Russian oil, despite Western sanctions and efforts to isolate Moscow over its war in Ukraine. Citing "national security" concerns, the US imposed the measure as a punitive step.

With USD 87 billion worth of Indian exports to the US now at risk, the stakes are high.

Experts from across sectors weigh in on the long-term impact

Aloke Nandi, President, Finrex Forex Advisory Services said, "Over the last few months, horror stories about the impact of tariff hikes by the US have been repeatedly splashed over the media. None of these really looked at the underlying data. Even with a pessimistic view, exports to the US might drop by USD 21 billion, but this will likely be partly offset by higher exports to other nations and reduced imports linked to these goods. A current account deficit (CAD) rising to 1–1.5 per cent is not life-threatening. Unless the US imposes extreme measures like full trade sanctions, India will withstand these tariffs."

Sarvadnya Kulkarni, CEO, General Instruments Consortium, acknowledged the immediate blow but noted the potential silver lining, "In the short term, raising tariffs to 50 per cent will swiftly bite, especially for MSMEs. About USD 87 billion in US-bound exports could be affected. In the long run, though, this may force India to diversify markets, bolster value-added manufacturing, and enhance export competitiveness."

In fact, the government is already looking to direct Indian exports towards alternative destinations. Recently, Union Minister for Fisheries, Animal Husbandry and Dairying, Rajiv Ranjan Singh, noted that other markets are available for India's seafood exports. "The EU, Japan, South Korea, UK, Russia, Australia, West Asia, South East Asia, and many other countries are open for export of Indian seafood."

Meanwhile, Smita Singh, Partner, S&A Law Offices, stressed the disadvantage India now faces. "With India now facing a 50 per cent tariff compared to Vietnam, Japan, and Bangladesh at 15–20 per cent, our exports could be costlier by 35 per cent. Sectors like gems, jewellery, textiles, footwear, apparel, and chemicals, which make up 55 per cent of exports to the US, will be most impacted. The government may need to offer targeted relief if negotiations fail."

On the other hand, Kunal Gupta, Co-founder & CEO of EMotorad expressed, "We had projected INR 150 Cr in e-bike exports this year, with over INR 100 Cr destined for the US. The sudden hike has disrupted plans. But India has always thrived on adversity, we'll recalibrate, find new markets, and back our country's vision of self-reliance."

In electronics and semiconductors, Sanjeev Kumar, CEO, Logic Fruit Technologies, warned of supply chain risks. "Tariffs of up to 100 per cent on Indian semiconductors and electronics risk erasing supply chain advantages and triggering production migration. Luxury exports like jewellery may remain resilient, but cost-sensitive segments could see significant damage. Policy agility in the coming weeks will define whether this is a setback or a catalyst for strategic course correction."

Pawan Gupta, Co-Founder of Fashinza, believes apparel exports face an uphill battle. "At 50 per cent tariffs, exports become unviable. The good news is India's diverse, high-value-added products are in demand in the UK and EU. But apparel manufacturing, with its high labour input and low wages, is not viable in developed markets, this is why tariffs in this sector make little sense."

For the medtech sector, Neeraj Katare, Founder of Tracky, sees both risks and opportunities.
"The increase in tariffs is a double-edged sword for health tech. It raises import costs for essential components, but it also forces us to localise. With the right infrastructure and incentives, India can become a global health tech manufacturing hub."

Himanshu Kohli, Co-founder, Client Associates, placed the issue in a broader economic context. "India's economy is largely domestic-oriented. Merchandise exports to the US account for only 2.2 per cent of GDP. A higher terminal tariff could trim GDP growth by 40–100 bps, but the economy remains relatively insulated compared to export-heavy Asian peers."

Looking Ahead

The US and India maintain a strong trade relationship, with bilateral trade reaching approximately USD 212 billion in 2024. That year, the US imported around USD 87.3 billion worth of goods from India, giving India roughly an 18 per cent share in total US goods imports. The US goods trade deficit with India stood at about USD 45.8 billion.

India's top three exports to the US in 2024 were pharmaceuticals (USD 7.5–8.1 billion), telecom instruments (around USD 10 billion), and precious stones, gems, and jewellery (USD 5.3–10 billion). With the new US tariffs of up to 50 per cent, an estimated 55 per cent of this export value including textiles, gems and jewellery, and engineering goods is directly at risk.

Nevertheless, there is still a possibility that the tariff tensions could be resolved. India has extended an invitation for talks and welcomed an understanding between the US and Russia for a leaders' meeting in Alaska on 15 August. New Delhi endorsed the summit, noting it could help end the Ukraine conflict and open prospects for peace, potentially easing the geopolitical tensions underpinning the tariffs.

Though, many experts believe the disruption could serve as a catalyst for India to expand into new geographies, strengthen domestic manufacturing, and ultimately emerge more resilient in the global trade arena.